Slow, but steady natural gas rig growth shows promise in Texas

UTSA's Center for Community and Business Research releases its annual Eagle Ford Shale economic impact report. It concludes the area may never see high rig counts again, but that production of crude and condensates have been consistent.

Chris Ramirez, Caller-Times

It's modest growth for now, but we'll take it.

The U.S. rig count added three rigs last week, capping weeks of small, but consistent, growth. Experts say the trend will continue in the future as global demand for natural gas swells.

Members of Corpus Christi's government and business community watched the final stages of the ...more

Members of Corpus Christi's government and business community watched the final stages of the Stampede tension-leg platform's construction during a recent tour of the Port of Corpus Christi. The Hess Corp. will use the platform as part of its offshore operations off the Louisiana coast.

Chris Ramirez/Caller-Times

The number of oil-seeking rigs nationally fell by four, but natural gas-drilling rigs increased by seven during the week that ended March 9, according to weekly data from Baker Hughes, an oilfield services, supply and technology firm that tracks energy industry trends.

Two of the Texas rigs were added in the Permian Basin, which stretches across west Texas and New Mexico.

Jim Lee, chief economist at Texas A&M University-Corpus Christi, noted most of the recent growth has come from the Permian Basin, where new reserves have been found.

"The expectation is always that energy prices will bounce back, as they did in history," Lee said. "It’s just a matter of time, and so we must plan ahead."

A total of 984 oil and gas rigs were running across the United States last week. During that time, 188 rigs were targeting natural gas and 796 were targeting oil. The rest were drilling service wells.

In Texas, 490 rigs were running, up seven rigs from the week before and up more than double the volume from the same point a year ago (215).

Despite rising oi prices, the industry is still at a lackluster level.

Despite rising oi prices, the industry is still at a lackluster level.

Associated Press photo

Many energy companies are also expecting oil prices to stay lower than they were a few years ago, during the height of the shale boom, and are turning more of their attention to natural gas, said Ray Perryman, CEO of The Perryman Group, an economic research and analysis firm in Waco.

Despite an oversupply in the natural gas market at one time, Perryman expected both drilling and prices for the commodity to hold steady, or even climb, because of the balanced market and the growth in global demand.

"We do seem to be in a period reflecting a 'new normal,' " Perryman said. "I don't see a return to $100-per-barrel oil any time soon, but barring a major shock to the global economy or radical change in OPEC policy, the current market ranges are sustainable."

The revelation comes on the heels of a report by the U.S. Energy Information Administration that predicted a 40 percent increase in natural gas consumption in the industrial sector over the next three decades.

It said by 2020, total industrial natural gas consumption in the United States was on pace to surpass that of the early 1970s. It went to speculate several industries, including bulk chemicals, food, glass, and metal-based durables would continue to grow until 2050, rather than switch fuels.